Rajneeshees in Oregon -- The Untold Story: As problems grow for the Rajneeshees in 1984, an increasingly unstable Sheela continues her vicious campaign against enemies.

In fall 1984, Ma Anand Sheela believed she had leverage to play "Let's Make a Deal" with Oregon's governor.

She wanted Vic Atiyeh, a Republican in his second term, to dispose of three major problems facing the Rajneeshees.

In turn, she would dispose of a problem facing the state -- what to do with thousands of homeless men imported to Oregon in an attempt to swing local elections, but now being discarded to surrounding towns by the Rajneeshees.

She couldn't get an appointment with Atiyeh, but his chief of staff, Geraldine "Gerry" Thompson, arranged for a secret night meeting at a state office building in downtown Portland.

Thompson arrived with the head of the Oregon State Police, who discreetly placed officers around the building. Sheela arrived with Swami Krishna Deva, mayor of Rajneeshpuram and part of the commune's dirty tricks squad.

Thompson, well aware of Sheela's volatility, set the rules. There would be no shouting. There would be no profanity.

Sheela launched into her demands.

She wanted the governor to help clear visa troubles so her guru could avoid deportation. She wanted the state to drop its court case seeking to disband their city of Rajneeshpuram. And she wanted land-use obstacles removed so their compound's construction could continue apace.

In turn, she said, the Rajneeshees would help get the remaining homeless back where they came from.

Acting with Atiyeh's authority, Thompson said no deal. Growing angry, Sheela became abusive and profane.

Thompson finally slammed her palm on the desk. "That's it! Meeting over." Sheela sulked out into the hall, spewing invective.

But Krishna Deva, better known as KD, poked his head back into the office and told Thompson, "Just keep talking to us." The two set up a private link, and from then on he kept Thompson informed of the most intimate details of what was happening at the ranch, including the escalating danger.

Alarm among Sheela and her elite deepened. She secured their loyalty with privileges no one else in the commune had: private rooms, cars, special clothing. Together, they perceived ever-increasing threats from outside and from within.

They feared their guru would be harmed by vigilantes or arrested by authorities in what they were sure would be an unlawful act. They feared losing their own special places in the sect.

Their apocalyptic view wasn't shared by ordinary sannyasins, who were focused on the daily work, meditation and devising a life intended to be a global model. They didn't share in Sheela's paranoia, and some were embarrassed by her public tirades.

But most watched without protest.

They knew Sheela and her executive staff quickly punished doubters and challengers. Rank and file could be moved without notice to a new home or job. One of the commune's top lawyers crossed Sheela and soon found himself driving a bulldozer.

Complaining sannyasins were told they could -- or must -- leave the commune. To get there in the first place, however, worshippers typically sold all their possessions, donated most of their money to the commune and severed ties with outside families and friends.

Most truly believed Rancho Rajneesh was their home for life. Where would they go if that was taken away?

Arson squad

By late 1984, Sheela and her team were more isolated than ever.

They were exhausted. To keep going, Sheela relied on a regimen of medications. Nervous energy so robbed her of sleep that she resorted to a drip line for sedation. For her and the others, the exhaustion made their demons loom more menacing than ever.

One was Dan Durow, the Wasco County planner whose enforcement actions slowed or stopped construction at the ranch. They were particularly concerned that he had documented illegal construction at the ranch.

In her fatigue-fogged brain, Sheela reasoned that Durow couldn't act against the commune if his office was destroyed. Late one winter evening in early 1985, Sheela gathered with a half-dozen others to go over photographs and maps of the house that had been converted into offices for the Wasco County Planning Department. They decided to torch it.

Sheela called on trusted operatives: Ma Anand Ava, born Ava Avalos, and Ma Dhyan Yogini, born Alma Peralta; and Swami Anugiten, an arborist previously known as Richard Langford. The team used phony names to rent a Portland apartment as a safe house and recovered a Buick stashed at the airport for such missions.

Ava drove the team east on the freeway to The Dalles and about midnight dropped off Yogini and Anugiten just blocks from Durow's office. The two pried open a window, crawled inside and closed the drapes.

For about an hour, Yogini and Anugiten rifled through cabinets and desks, scattering government papers all about. To start the fire, they placed eight candles inside cardboard squares soaked with lighter fluid. The pair intended the candles to act as timers, igniting the cardboard once they burned down. The two arsonists lit the candles, crept back out the window, and closed it. But that starved the candles of oxygen, and only two fires started.

On their drive back to the safe house, the arsonists tossed their clothing, tainted with lighter fluid. In Portland, they called a ranch leader in a prearranged signal that meant "mission accomplished."

Back in The Dalles, a passing motorist called in the alarm, and firefighters quickly extinguished the flames before there was much damage. The heat melted part of the Planning Department's main computer, but the hard drive remained intact. Some papers burned, and others were damaged by water. But Durow and his crew were back in business within two weeks.

Legal setbacks

The Rajneeshees were no more successful later that May in trying to derail a state hearing that was exposing improper construction at the ranch. The state claimed the commune illegally wired 600 tents in preparation for a world festival.

The hearing was in a conference room at the State Library in Salem. A Rajneeshee contaminated unattended drinking water with an overdose level of Haldol. On one day, the state's chief electrical inspector got sick. The next day, Assistant Attorney General Karen Green had trouble during questioning as her jaw inexplicably froze.

When the session ended for the day, Green's two-block walk to her office became a half-hour ordeal. Her feet and legs, coursed with Haldol, cramped so much she froze in place.

But the poisonings didn't alter the outcome. The hearings officer proposed a $1 million fine against the commune for the wiring.

At the same time, federal prosecutors continued their now-relentless investigation into immigration fraud among Rajneeshees. A grand jury met for long hours, facing a deadline to indict soon or go home. The Rajneeshees monitored the secret work as best they could, growing alarmed when a loose-tongued federal mediator told them the guru himself could face criminal charges.

On the state front, Attorney General Dave Frohnmayer was winning round after round in his effort to declare Rajneeshpuram an illegal city. The commune's entire legal staff trooped to the guru's compound for guidance at one juncture. Advised the case was a losing matter, the guru instructed the lawyers to soldier on. Losing the case, though, meant losing the city and the worldwide base for Rajneesh.

Sheela, meanwhile, was wrapping up a trip to Australia. There, she badly botched a business deal. Resorting to drugging and eavesdropping, Sheela manipulated her way into partownership of a public company, only to watch its value plummet overnight when word got out. The move cost the commune nearly $1 million.

When she returned to Rancho Rajneesh, she faced incessant demands from the guru to expand his fleet of Rolls-Royces. He wanted to make it into the record books as the man with the most, and it was costing the financially shaky commune $200,000 a month. He also was demanding a $1 million watch, telling her to divert funds from the commune's needs if necessary.